CASH AND CASH EQUIVALENTS

Cash

Includes currency, coins, checks, money orders, and bank deposits that are readily available for immediate use.

Cash Equivalents

Short-term and highly liquid investments that can be easily converted into cash without significant changes in value.

Bank Reconciliation

A statement that resolves the differences between the bank statement balance and the cash balance per book.

Book Reconciling Items

Credit memos, debit memos, and errors that need to be adjusted by the depositor to reconcile with the adjusted balance.

Bank Reconciling Items

Deposits in transit, outstanding checks, and errors that need to be reconciled with the bank statement balance.

Certified Checks

Checks accepted by the bank where the drawer's account has been debited, but the payee has not yet withdrawn the funds.

Petty Cash Fund

Money set aside for small and recurring expenses that are inefficient to settle by issuing checks.

Imprest Control System

A control system where all cash receipts are deposited intact and all cash disbursements are made by check.

Bank Overdraft

A negative balance in the bank account resulting from a check exceeding the deposit amount.

Compensating Balance

A minimum amount of deposit required by an informal agreement, which may or may not be included in cash depending on legal restrictions.

Time Deposits

Bank savings accounts that earn interest but have restrictions on immediate withdrawal or check issuance.

Credit Memos

Collections by the bank, interest credited, and matured time deposits transferred to the current account.

Debit Memos

NSF checks, bank service charges, and authorized bank debits.